01/14/2016

On Wednesday, the First Responder Network Authority (FirstNet) released a much anticipated request for proposals (RFP) for the nationwide public safety LTE network. The Indefinite Delivery/Indefinite Quantity contract with a limit of $100 billion for a performance period of 25 years marks what FirstNet’s Chief Executive Officer Mike Poth describes as a “first of its kind public-private partnership”. Proposals for the project are due by April 29th and many telecommunications carriers will likely enter the competition, which could prove profitable as any of the unused 20 MHz of 700MHz broadband spectrum will be left under the operator’s control. Moreover, the RFP highlights 16 key objectives requiring additional investments in a number of other auxiliary technologies to ensure network functionality.

Following the lead of other nations (United Kingdom and South Korea), the RFP is a crucial first step in the process of shepherding the American public safety system to modernity in an age of mobility and information. Over time, by increasing interoperable communications among first-responders and providing improved situational awareness with multimedia data, the network will inevitably revolutionize the way first-responders complete business processes and interact with one another and their communities. Moreover, FirstNet enables public safety workers to employ some of the very same technologies in the workplace that they are so comfortable with in their personal lives. In this way, the project is more than the development of infrastructure to support first-responder LTE use; with the RFP outlining the need to ensure user adoption, create a device and application ecosystem, and guarantee security among other objectives. For only with these tangential developments will the system work both technically and fundamentally to improve the effectiveness of first-responders and the lives of those they serve.

The success of the network ultimately depends on user-adoption, for a network without users, will be as effective as the current system albeit at a greater cost. To this end, devices operating on the network should meet industry work standards as well as ease-of-use expectations. In particular, the RFP states that mobile devices should be “capable of gloved, one-handed, or hands-free operation as well as…multimedia and high-definition data transmission both from humans and machine-based sensors”. Fortunately, several mobile device and public safety equipment manufacturers—Sonim, Kyocera, Motorola, etc.—have developed Band-14 devices that live up to these requirements. Capable of dealing with rough work-conditions characteristic of the public safety industry, these devices also boast many of the features prevalent on consumer devices, thus reducing the learning curve often associated with custom-built rugged devices. In essence, FirstNet looks to improve the functionality and integrate further, a piece of equipment already deemed critical by many first-responders. Often used unofficially for acquiring contextual information, communicating with co-workers, or accessing organizational email, smartphones on a dedicated first-responder network are more likely to be integrated with back-end information systems and other personal safety equipment; thus increasing the productivity and effectiveness of a largely mobile workforce.

As important, if not more important than a device ecosystem, a vibrant application ecosystem supplies the tools for modernizing workflows and providing first-responders with information fundamental to quick and appropriate decision-making. In particular, the RFP calls for the development of a “vibrant third-party applications developer community” and application store that will generate an “evolving portfolio of mobile and enterprise applications, as well as cloud services”. APCO International, the world’s largest public safety professional organization, understanding the importance of public safety mobile applications, created Appcomm.org in 2013. Initially listing 60 mobile applications dedicated to public safety, the site now provides access to over 200. First-responders can use these applications to improve their situational awareness, engage with the community, document evidence, and gain access to business-specific information in seconds. In this way, applications will undoubtedly change the way first-responders complete business processes by brokering access to important contextual information and enabling greater autonomy. Large and small software vendors alike have devoted resources to creating applications that address the unique needs of first-responders and encourage end-user adoption.

FirstNet’s RFP is intimidating with over 500 pages and 13 sections. This is indicative of the enormous scope of the LTE network project. With many individual moving parts vital to the success of the overall network, a strong and open relationship between U.S. agencies and the private sector is crucial. A number of early adopters—New Jersey, New Mexico, LA-RICS, Harris County—have provided test-cases for the large scale deployment that remains several years away. These experimental deployments should help develop guidelines and use-cases for how to best take advantage of the capabilities engendered in a dedicated first-responder LTE network. Moreover, the experiences of these communities should help mitigate obstacles such as balancing mobile security with usability. The network and the mobile devices on it will need strong security to protect the sensitive information housed on public safety networks. However, these security measures should be designed in a way that does not deter user-adoption or effectiveness. FirstNet will not be a panacea for all of the industry’s technical woes but rather is a stepping stone on the path to modernization; a path that will necessitate all communities buy into the benefits of mobility.

Written by Matthew Hopkins. For more information, be sure to review our forthcoming Public Safety View discussing FirstNet developments, set to be released next month (February), or contact us at info@vdcresearch.com. The author can be contacted directly at mhopkins@vdcresearch.com.

12/22/2015

In Q3, the total rugged mobile hardware market, sized as all rugged notebooks, tablets, vehicle mounted devices, and handhelds, grossed just over $1 billion in revenue shipments and has produced year-to-date (YtD) revenue shipments of $3.2 billion. Also looking YtD, the market has shipped over 3.1 million units across the globe. By the end of Q4, we will likely see YtD revenue shipments surpass $4.2 billion and YtD unit shipments near 4.3 million units. While the rugged market has actually seen a year-over-year (YoY) revenue contraction of 1.7% compared with its position in Q3 2014, it has also produced 5.1% growth from Q1 2015 to Q3 2015.

Figure 1: Rugged Mobile Hardware Global Overview

Breaking down this $1 billion market by form factor, we find weakened global demand for rugged notebooks, stagnation in revenue for tablets, and strong revenue shipments for handheld devices (the handhelds category includes devices such as smartphones and PDAs). As economic conditions continue to stabilize, this recent growth comes as welcome news to many hardware vendors who look to take advantage of increased economic stability and opportunities presented in the Americas and Asia-Pacific (APAC) regions. For example, the growth in the handheld revenues occurred primarily in the Americas and APAC, with global YoY growth of 5.0% over Q3 2014.

While global tablet revenues shipments remained at similar levels to Q3 2014, EMEA generated more revenue shipments from tablets than from notebooks this quarter. One possible reason for this stagnation in growth is due to the increased competition from consumer grade tablets. One specific instance can be seen with the latest Microsoft Surface Pro, which has received relatively positive reviews and adoption from the enterprise market. Furthermore, both EMEA and APAC regions saw slight YoY growth in tablet revenues as the Americas saw minor YoY contraction. Rugged notebook revenues witnessed their highest quarterly performance on the year, but still had YoY revenue shipments fall in all regions, producing a global revenue dip of 14.9% between Q3 2014 to Q3 2015.

Overall, the rugged hardware market continues to maintain a strong global presence, even in spite of some areas of weakness and additional competition from consumer grade technologies. While this increased competition from consumer grade devices may seem like a hard hit to the rugged space, it can be counteracted with rugged vendors offering more advanced technological portfolios. Increases in processing speed, RAM, memory, camera quality, dual-OS capabilities, touch capacity, and enhanced security are all features which are slowly making their way from the consumer market into the rugged market space. As rugged vendors add these, and other, new technological facets to their mobile solutions, their specifications comparisons to consumer grade devices become far more attractive. Additionally, as economic conditions continue to improve, especially in the EMEA regions, rugged revenues will likely rebound for many form factors.

For more information, be sure to review our forthcoming full Q3 mobile hardware tracker and database, set to be released in late December. For additional information please contact VDC at info@vdcresearch.com. The author can be contacted directly at croche@vdcresearch.com or via his Twitter @Cam_Roche.

11/17/2015

The postal-courier industry, in the midst of market changes, will need to grapple with a significant technological challenge looming on the horizon. The delivery of goods is an expensive proposition that requires significant capital investments and a large supply of labor. Technology, in the form of handheld devices and delivery software, works to create an efficient process that enables companies to minimize costs and maximize revenues. The handhelds used by delivery personnel include a number of important capabilities—bar code scanning, messaging, GPS—that help facilitate workflows. From enabling track and trace to obtaining proof of delivery, the current use-cases for these devices are plentiful. As the expectations of consumers grow and their desire for greater personalization increases; postal-courier organizations will need to heavily rely on these devices to transfer real-time data between all parties involved in a transaction. Moreover, postal-courier organizations attempting to expand their service offerings to offset declining mail volumes and differentiate themselves from the competition will employ handheld devices and new applications to complete additional business processes. To this end, upgrading to a new, more modern operating system helps organizations expand into auxiliary, customer-facing services.

Today’s Operating System

While several postal-courier organizations have chosen smartphones as their delivery device, the vast majority have opted for ruggedized enterprise mobile computers. Over 80% of these devices run on legacy Windows Embedded CE and Windows Mobile 6.x platforms. These legacy systems are particularly well-suited for enterprise devices and applications due to their customizable nature and strong ecosystems of solution providers developing applications. Moreover, comprehensive lifecycle support from Microsoft and OEM partners provides further value-add for these platforms. However, Microsoft ended meaningful support for Windows Mobile 6.x in January 2015, and support for Embedded CE will end shortly; with Microsoft only providing security patches for the platforms through 2020. As a result, over the course of the next few years, postal courier organizations will need to transition to a new operating system.

In theory, the logical next step would be to transition to the most recent iteration of Windows without needing to implement any serious changes. However, the situation is far more complicated than that; leaving many organizations debating their next steps.

The Path Forward

With the deadline of 2020 fast approaching, companies must begin evaluating their options regarding hardware, operating system, and software. In choosing an OS for next generation enterprise handheld devices, the decision comes down largely to the consumer heavyweight, Android, or the enterprise incumbent, Microsoft. However, with Microsoft having failed to deliver a desirable operating since the release of Windows Embedded Handheld 6.5 in 2011; some in the industry have moved to the Android operating system with its modern features and capabilities.

Android does not represent a perfect solution. Designed for the consumer space, the operating system lacks many of the security and management features of Windows as well as the substantial base of enterprise developers and OEMs supporting it. Nonetheless, Android’s enterprise user-base has grown steadily over the past few years, coinciding with improvements in the OS’s enterprise functionality. All leading rugged OEMs now offer an Android option, and several view this operating system as the way forward for the industry. Moreover, many ISVs that previously supported legacy Windows systems have shifted their R&D focus to Android (and iOS). This growing portfolio of Android devices and enterprise applications serves as justification for many to switch to this OS in light of Microsoft offering no suitable alternative.

Microsoft’s hopes to regain its market share, or at the very least stop the flow of users away from Windows, lie with its new OS for enterprise handheld devices—Windows 10 IoT Core. Postal-courier organizations, specifically those in the United States, have a pent up demand for a Windows solution, albeit having been burned by Microsoft in the past. Failing to deliver a Windows 7 solution and releasing an unsuitable solution in Windows 8; confidence among those in the space is waning. Windows 10, with its cross-device functionality and enterprise features could meet this demand. However, the release continues to be delayed, incentivizing those in need of a more immediate upgrade to switch to Android. Continued delays, or the release of an incomplete product, would further spur Android adoption, essentially sealing Microsoft’s fate in the rugged enterprise space.

What about the Apps?

Devices and operating systems play an important role in the completion of business processes, but applications/software are the last piece of the puzzle. Most organizations either develop their applications internally or outsource the process, but either way, the finished applications provide the key to performing tasks in the field. Unfortunately, postal-courier organizations planning an OS transition will also need an application-transition plan. For regardless of OS choice, organizations will need to recode old applications or develop new ones.

Windows 8 and 10 are not backwards compatible with legacy Windows systems, and a move to Android or iOS will similarly require recoding. This process, in most cases, will be expensive and cumbersome. If the company has the technological resources, they may complete the project in-house; however, most organizations will likely need to outsource at least some of the project. There are a number of tools on the market, such as Xamarin or iFactr, which enable cross platform development, and essentially provide organizations with a bridge to their next OS. Microsoft is also providing hooks from Visual Studio (VS) to the Xamarin platform making it easier to leverage existing .NET and C# skillsets to support development on Android or iOS. Moreover, we expect many in the industry to use this period as an opportunity to modernize applications that have been in service for decades.

The Bottom Line

Handheld devices play an instrumental role in the postal courier market now and moving forward. The next few years mark a period of mass transition of the likes never seen in the postal courier industry, and the lack of leadership by Microsoft creates an environment of uncertainty. However, this period also marks a moment of opportunity for organizations to modernize their systems and applications. The path taken today will largely dictate the quality of enterprise mobility capabilities tomorrow.

Written by Matthew Hopkins and David Krebs. For more information, be sure to review our forthcoming full postal-courier report, set to be released this month (November), or contact us atinfo@vdcresearch.com. The author can be contacted directly atmhopkins@vdcresearch.com.

07/31/2015

Split-billing, the process by which mobile phone charges are divided based on certain criteria and paid separately by the employee and employer, is a capability that is increasingly attractive due to consumerization trends. Companies providing mobile solutions to employees face a growing challenge in identifying and separating corporate and personal use; this is especially difficult in a bring-your-own-device (BYOD) or corporate-owned, privately enabled (COPE) environment. The issue remains divisive, with some employers expecting employees to pay for all mobile use—both corporate and personal—while others have implemented stipends, corporate phone plans, or reimbursements for corporate use. All of these methods have evident drawbacks, often forcing either the employee or employer to pay a disproportionate amount of the mobile costs. This issue became even more relevant in August of 2014 when the California Court of Appeals decided in Colin Cochran v. Schwan’s Home Service, Inc. that if employees must use their cell phone for work-related calls, then they must be reimbursed a reasonable portion of their cell phone bill. Under this ruling, companies in California will need to implement a strategy for reimbursement if they have employees using mobile devices for business purposes; failure to do so could result in costly litigation.

While California Labor Code Section 2802 may be unique in its wording and differ from labor codes in other states (with the possible exception being Massachusetts), the ruling could set a precedent that will entail a more national focus. In this vein, VDC urges companies who are moving forward in implementing BYOD policies to develop defensible ways to reimburse their employees. Unfortunately, split-billing technology by and large does not adequately address the needs of companies; however, some vendors have made significant progress in developing solutions that will solve employer mobile billing headaches.

Solutions Remain Few and Far Between

VDC Research has identified seven key players in the split-billing space and analyzed their solutions to determine which vendors will likely have the most success going forward.

AT&T: The company's attempts to develop a split-billing solution have come in fits and starts. While AT&T’s Toggle solution has continued to evolve along with the company’s AT&T Work platform, the company has yet to deliver a fully functional product (thus far).

BlackBerry: The acquisition of Movirtu in 2014 gave BlackBerry the technology to develop its WorkLife solution which elegantly separates voice, SMS, and data. (Samsung is also participating in this market via its partnership with BlackBerry).

Good Technology: By acquiring Macheen last October, Good has been able to quickly build a split billing solution that separates corporate app data usage from personal activity.

Movius: The company’s CAFÉ (Communications Applications Framework Engine) platform enables service providers with a means of quickly deploying applications to complement their core functionality of enabling users to have separate personas and different phone numbers for voice, messaging, and data (Movius has partnered with virtualization specialist Cellrox for this capability).

Mast Mobile: The company leverages Oracle’s billing and revenue management solution to provide a unique and comprehensive solution that allows an employer to implement split-billing for voice, messaging, and data. Founded in 2013, Mast is a young company and is quickly evolving its solution to include stronger enterprise-grade features.

OpenPeak: The company recently secured a patent in January for its split-billing technology. The technology enables companies to pay separately for data used through secure or enterprise applications in a container. OpenPeak white-labels this technology to AT&T.

Syntonic: Like Mast, Syntonic is also a young company (founded in 2013). The company’s DataFlex platform provides core split-billing and data usage analytics capabilities.

Foreseeable Change in the Near Future

As BYOD and COPE trends continue to grow and companies evolve their mobile initiatives and implement new applications, VDC expects demand for split-billing solutions to increase. Enterprises have struggled to catch up to mobile technology and have focused primarily on ensuring the security of their data and finding use cases for the technology both in terms of increasing consumer engagement and improving employee productivity. The issue of paying employees for their mobile phone use has been largely overlooked, with many companies hoping to avoid the conversation altogether. However, with California’s court decision setting a strong precedent, this period of blissful ignorance is quickly drawing to a close.

Unfortunately, the solutions available to companies to effectively identify and split personal and corporate mobile use remain slim and incomplete. This is due largely to the heterogeneous nature of mobile devices and their operating systems, as well as the need to work with both the organization and telecommunications providers. Consequently, vendors in this space have developed unique technologies that offer vastly different experiences and varying levels of split-billing competency.

The vendors, broadly categorized, fall into three categories: EMM providers, telecommunications providers, and split-billing-first providers. Firms that fall into the first two categories have largely either partnered with other companies with split-billing capabilities or acquired smaller firms with the technology to provide the solution. Predictably, split-billing-focused firms, while small, have had the most innovative solutions and have become acquisition targets for larger EMM and telecommunications providers looking to expand their offerings to compete with other firms who have developed the technology. VDC sees Mast Mobile and Movius as the best near-term targets for acquisition, given their comprehensive solutions, small size, and innovative technology. There is a broad range of vendors that that could fill the role of suitor, including Citrix, Microsoft, IBM, and VMware would all benefit by acquiring a split-billing solution as the capability would expand and complement these firms' mobile solution range. VDC expects rapid growth and consolidation in this small segment of the enterprise mobility market as companies look to further expand mobile initiatives while reigning in the costs.

VDC will take a deeper look at these trends in an upcoming VDC View.

With Eric Klein and Kathryn Nassberg

*Correction (8/10/15): This post was revised to note Movius' ability to provide split-billing services for data as well as voice and messaging.

02/13/2015

Email, which has long been an established piece of enterprise productivity and at the tail-end of innovation, has received a considerable makeover in recent months. An increasingly mobilized workforce in recent years has meant that the majority of emails are now read first on a mobile device. The result is a palpable trend in the market to revamp email where ease of use and productivity is maintained in a cross-platform and touch-centric format. Many of these innovations include more seamless calendar integration, improved triage, search, and archiving functions, as well as enhanced communication tools that integrate chat and voice that are particularly well-suited to mobile platforms like the smartphone.

Major players, including Google, IBM, and Microsoft have worked to further integrate email into their mobile offerings and acquiring firms to help bolster their position. Recent acquisitions by Microsoft and HP of Accompli and Voltage respectively, as well as the emergence of companies like Mailpile, ProtonMail and Nacho Cove lend credence to this trend towards a more mobile-first experience for enterprise email. Even companies that have traditionally focused on consumer markets are throwing their hat into the ring: last month, Amazon announced its own email service, WorkMail, to be powered by the increasingly popular Amazon Web Service. Thomas Döhler, General Manager of the WorkMail team, notes that enterprise is at the point where email is now part of the business process. Rather than a simple communication tool, it has become an integral part of general business processes and a receptacle where critical business information is stored and controlled. Email, without question, is the most ubiquitous means of enterprise communication, despite the recent rise in popularity of social collaboration and texting. While newer iterations will look to integrate these social features into the mix to enhance productivity, email will remain the primary means of enterprise communication for the foreseeable future.

It is worth noting, however, that this is not the first time that email has undergone a significant revamp. Over the years, numerous companies have tried to reinvigorate email, but failed to fundamentally alter the nature of the inbox. However, the growing importance of mobile platforms in business has meant that mobility has forced a willingness to change among companies in how they treat email. The result has been a rethinking in how email is accessed and integrated into a cross-application and cross-platform ecosystem. 2015 will mark a watershed year in which there is a growing willingness to change how companies treat email and could see a fundamental change to the nature of the inbox if the challenges surrounding privacy and security can be sufficiently addressed.

VDC will be taking a closer look at the challenges faced in this month’s VDC View. Stay tuned for more information.

01/30/2015

Despite cries that the enterprise notebook is dead, the form factor is making a long-awaited comeback, as businesses realize that tablets are not the notebook replacement they once believed.After a period of declining year-on-year sales, notebooks have been rebounding in the enterprise, as well as showing signs of positive growth in the consumer market. The use of mobile devices to support line-of-business workers across numerous sectors continues to grow as organizations benefit from an increasingly connected and productive workforce, according to VDC's most recent research. Industries continue to internalize the benefits of a mobilized workforce, as data from VDC shows an anticipated average increase of mobility-based budgets for 2014 of 10.6%. Although mobile workers will continue to leverage a variety of form factors including smartphones, tablets, and notebooks, the overall durability and resilience make this form factor increasingly desirable. This harkens back to Microsoft’s vision PC Plus vision for the market back in 2011. While they might have misjudged Windows 8’s ability to usher in that era, the recent figures for notebook shipments have borne out the idea, especially as tablet sales continue to stall. VDC anticipates that the enterprise notebook market will continue to grow, reaching almost 80 million units in 2014 – nearly half of the total notebook market. While the market has matured considerably, it is still far from the “post-PC” erosion predicted by many, especially as newer generations of the PC, like the Surface Pro 3, gain traction.

After a particularly soft year in 2013, overall notebook performance rebounded in 2014, especially in the enterprise sector. Much of the momentum came from the retirement of Windows XP, which forced many organizations to upgrade their installed base, while others either scaled back or placed tablet initiatives on hold in favor of notebooks. VDC expects the upgrade cycle will continue well into 2015 with the anticipated launch of Windows 10 to provide an additional uplift, albeit at a lower year-on-year rate. However, this will likely remove any incentive for enterprises to consider further deployments of Windows 8.1, whose reception has been lackluster both among consumer and enterprise markets alike. Although enterprise notebooks are primarily the domain of Windows, Apple’s presence continues to grow, with the iPad and iPhone serving as key gateway for OS X. VDC estimates that Apple’s share of the enterprise notebook market will reach 7.5% in 2014, especially with growing support of Windows applications on iOS and OS X making the inclusion into IT solutions an increasingly viable option. This is reflected in the most recent figures released by Apple, which showed 14% YoY growth from Q1 2014.

VDC estimates that, of the 80 million notebook shipments to the enterprise in 2014, approximately 28% – or 22 million units – were deployed in support of line-of-business applications. These applications range from field-based insurance adjusters and sales agents to service technicians and hospital care workers. An additional 440,000 rugged notebooks are forecast to ship in 2014, primarily supporting line-of-business workers in public safety, military, and industrial markets. Much like the overall notebook market, the rugged notebook market is emerging from a period of significant contraction in 2013 and the first half of 2014. Demand began to gain momentum toward the second quarter of 2014 with the increased rate of modernization to upgrade aging installed bases. However, overall, rugged notebook unit growth through 2018 is expected to be modest at 2.9% annually. As enterprise mobility continues to evolve, the notebook will remain the workhorse of devices for the foreseeable future.

12/17/2014

During Q3 2014 all rugged mobile form factors tracked – including notebooks, tablets, forklift mounted computers and handheld devices – posted year-over-year (YoY) growth, with notebooks and handheld devices leading the way. While the market dynamics for these solutions are increasingly encouraging, noticeable headwinds remain, limiting the growth potential over the next several quarters.

Rugged notebook shipments reached nearly $275 million in Q3, representing an increase of more than 10%, representing the second consecutive quarter of growth. The primary catalyst behind the recent swing in demand has been the retirement of aging systems running Windows XP. While that boost is likely to be short-lived, spending trends in target commercial and public sector segments remain positive. Nevertheless, price sensitivity will continue driving end users to opt for less rugged notebooks or alternative form factors such as tablets for their next-generation investments.

The rugged tablet market, the one consistent growth segment with quarterly growth upwards of 20% for the past two years, is showing signs of slowing. In Q3, tablets saw 12.7% year-on-year growth, which while strong, nevertheless represents a maturing of the market and the third consecutive quarter in which performance has eased from the previous quarter. Still, VDC anticipates that the rugged tablet market will top $500 million in 2014 and that the increased adoption of Android will present a growing opportunity as more enterprises move to adopt the OS for line-of-business applications.

The rugged handheld market, which represents the single-largest category at nearly $600 million, has begun to overcome the headwinds that had buffeted it throughout 2013 and into the first half of 2014. While the threat from lower-priced consumer smartphones remains, rugged vendors are modernizing their product portfolios with products more in line with customer expectations. Moreover, addressing the OS issue plaguing this category, adoption of rugged handheld devices running Android is reaching critical mass, including adoption by tier-I accounts in North America. The North American market had borne the brunt of the downturn but has rebounded in force, ending several consecutive quarters of contraction with year-on-year growth for Q3 topping 20%, supported by large-scale deployments in the retail and postal sectors.

12/08/2014

More than $200M has been invested in notable vendors that are participating in mobile development platform and tools market in just the past ~12 months.

Significant venture capital investments continue to pour into the mobile development platform and tools space. More than $200M has been invested in notable vendors that are participating in this market in just the past 12 months (see below). VC's who are banking on successful exits have reason to optimistic in our view.

On the M&A front, there have been two notable (and recent) acquisitions. mBaaS vendor FeedHenry was acquired by Red Hat in September 2014 for $82M, and testing and UI framework specialist Telerik was acquired by Progress Software in October 2014 for $262.5M. These are large transactions when compared to prior acquisitions in this space, which were on the smaller end of the spectrum (RhoMobile by Motorola, Nitobi by Adobe, and Worklight by IBM).

VDC believes that M&A in the space will be on the rise in terms of the size and number of acquisitions; this is natural in a rapidly evolving space. Core engineering will play a big part in vetting the valuation of future transactions with open technology, scalability, security, and resilience leading the charge. VDC sees valuations rising, based not only on revenue and progress with customer acquisition but on innovation and the ability to tie into broader ecosystems and emerging markets.

There are several logical buckets for potential consolidators in this space. Large enterprise software/middleware (such as IBM, Microsoft, Oracle, and SAP); Cloud vendors in the PaaS space who are looking to augment their mobile capabilities (e.g., Amazon, Citrix, Salesforce, VMware etc.); application lifecycle vendors (such as Adobe, Opentext, and Progress Software); mobile solutions providers (such as Intel and Synchronous); and potentially IT professional service providers looking to integrate and assemble their own solution to service their customers. We also believe there will be consolidation among the distribution, discovery, and analytics players. In summary, we believe the mobile applications space has reached an inflection point and thus will gain increased interest on both the funding and M&A front.

For more insights into our coverage of the mobile development platforms and tools market you can download the executive brief to the recent Report that we published on this topic.

09/30/2014

This week, VDC published the results of its quarterly device tracker, which follows both quarter-on-quarter and year-on-year figures for major OEMs both globally and by region.

Notebooks on the rebound

After six consecutive quarters of contraction, the rugged notebook market is showing signs of life, growing nearly 10% year-on-year in Q2 2014, rising to over 100,000 units shipped for the quarter. This comes after a particularly difficult year, in which the continued effects of GD-Itronix’s exit from the market and budget restrictions in the wake of the government shutdown struck a market grappling with the trend of tablets being increasingly deployed in line of business applications as a notebook replacement. With a few notable exceptions, all major vendors tracked by VDC saw growth in Q2, with some companies recording growth in the double-digits over Q2 2013. This return to growth is not limited to rugged devices, as major consumer-grade manufacturers are also reporting strong YoY performance. One of the key catalysts in this return to positive figures is the replacement of legacy devices running on now-retired XP. This factor, in addition to US military contracts and state-level conditions driving enterprise opportunities, has primarily fueled notebook growth, which could continue its trend with the release of newly-announced Windows 10 in late 2014/early 2015.

Tablet growth is strong but slowing

Tablets remain one of the best-performing form factors among rugged mobile devices – the market for rugged tablets grew 16% in Q2 2014 over the previous year, with EMEA showing an uptick of 37% year-on-year. Despite a solid global performance, the blistering pace of acquisition has begun to cool to less heated rates, down from rates of nearly 40% in H2 2013 (where certain vendors recorded triple-digit YoY growth) to more sustainable levels as the market begins to mature. While organizations are finding the limits of using tablets as a notebook replacement, the benefits of the form factor remain tangible and strong. Although rugged tablets run primarily on a more traditional WinTel platform, the barriers that have prevented a more widespread adoption of Android devices, including a lack of viable applications and limited product portfolio, are being overcome and could gain momentum in H2 2014, moving into 2015.

Handheld devices remain in flux

The rugged handheld market remained weak through Q2 2014, which saw a lessening contraction of 7.9% year on year vs. -8.8% for Q1 2014. The headwinds from investment/upgrade delays, limited access to capital and competition from lower-cost smartphones continue to persist, although several notable Tier-1 deals provided some lift in Q2 and are expected to have a greater impact in the second half of the year. Much of the hesitation revolves around OS uncertainty, which has continued well into 2014 as the number of devices featuring Windows Embedded 8.1 remains low among rugged vendors, and many are hesitant to embrace Android as an alternative OS for line-of-business applications. An embedded version of Windows 10 could alleviate the situation, but the question remains as to how quickly a new embedded Windows OS could be rolled out before extended refresh cycles need to be considered.

Sluggish performance for vehicle-mounted devices

Despite modest quarter-on-quarter growth, the vehicle-mounted market contracted year-on-year for the second consecutive quarter by 1.6%. There has been considerable encroachment from tablets, particularly in areas like public safety. With the growing functionality and display size of tablet devices, many organizations are looking to tablets as a lower-cost alternative to specialized vehicle-mounted devices. As a result, vendors are increasingly looking to consolidate their reach and focus more on niche markets where they are able to have greater control; frequently, these markets are “heavy duty” applications that include mining, construction, logistics, and warehousing. Although the market is almost exclusively the domain of Window, the question remains as to which version of the OS (embedded versus full professional) will gain sway, as IT departments are increasingly looking to these devices to function more as a PC than as a mobile device or terminal emulator as the ability to multitask and improvements in connectivity continue to grow.

09/04/2014

VDC Research has released its annual enterprise mobility report for smartphones and handheld devices, showing that the use of mobile devices to support line-of-business workers across numerous sectors continues to grow as organizations benefit from an increasingly connected and productive workforce. Industries continue to internalize the benefits of a mobilized workforce, as data from VDC shows an anticipated average increase of mobility-based budgets for 2014 of 10.6%. Smaller form factor devices – namely rugged handheld computers and smartphones – are among the most common devices being leveraged. VDC anticipates that a total of 3.3 million rugged handheld devices and 34 million smartphones will be deployed in 2014, growing the installed base to almost 70 million units.

However, increasing budget pressures and uncertainty in OS direction with rugged handheld devices are driving organizations to deploy greater numbers of smartphones for line-of-business applications. This trend has been aided by an expanding portfolio of third-party peripherals and accessories to bridge the gaps in data collection. The shift has been greatest in customer-facing industry verticals that are less centered on data collection and have fewer environmental requirements. This has primarily been the case in areas such as hospitality and retail, although there is interest in DSD and field services to adopt consumer devices and a growing desire to find a way to make BYOD work for frontline workers.

OEMs are evolving their designs

In response to the trend toward BYOD and enterprise-issued consumer devices, OEMs have evolved their product portfolio, taking design and user experience cues from their consumer counterparts. The rugged market, which traditionally has been divided primarily between data collection-centric “brick-style” devices and more portable PDAs, has expanded to include the rugged smartphone – touch-centric devices with no physical keyboards running on Android, but with fully rugged environmental specifications. This sub-category of smartphones represents one of the fastest-growing categories of small form factor devices for enterprise mobility, and VDC forecasts that the market will reach $3.8B by 2018.

OS uncertainty remains the largest obstacle to growth

Refresh cycles, which have become extended in recent years, are beginning to return in force among tier-1 companies. In the Americas, Home Depot, UPS, and the USPS are leading the charge with upgrade cycles that remain firmly rooted with rugged devices. Other organizations are returning to rugged devices after having experimented with smartphones in a line-of-business setting, which will also help to boost figures. However, the greatest obstacle for rugged OEMs will be OS direction. The majority of rugged devices on the market feature Windows Mobile or Embedded platforms that are rapidly approaching end-of-life, and the transition to Windows Embedded Handheld 8 has proven to be far from smooth, with mixed support from the OEM community. This has provided an opportunity for Android to enter the rugged market, but the OS faces its own issues of enterprise support and security, leading to muted demand from end users. This has led to considerable hesitation, as end users aren’t fully comfortable. As a result, VDC is seeing companies taking more of a ‘wait and see’ approach while maintaining their installed base.